New answers tagged investing
3
The reverse 3x ETN and the daily 3x ETN are not inverse to each other due to convexity and they do not offset each other.
Let's say you have 1 million AUM in each (i.e. the ETN delta is +3 million for the 3x and -3 million for the -3x), and the market moves twice by + 5%.
End of day 1 :
3x = 1.15 million, etn needs to go long 3.45 million delta (buy +300k ...
1
I think the primary obstacle is the costs involved/potential revenue offered for distributors. ETNs are already uncommon and their market isn't the same as standard equity ETFs; inverse ETNs even moreso.
Your proposed benefits also don't hold up. In this case, ProShares doesn't care about hedging, they're just trying to attract assets to get their bps....
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